Cost cutting : Different companies different methods

When it comes to cost cutting, the immediate measure any organization resort to is firing. Indian companies are not that fortunate. Part of it is culture and part of it is the Indian labor laws. Companies have to come up with innovative ways to achieve what appears to be a simple thing for our western counterparts.

Infosys for example has urged its employees to save $10 per person. It has also offered a very popular sabbatical option too. If rumors are to be believed, many employers have cut down on the cabs, coffee and even toilet paper. Satyam was rumored to be sending employees packing for fudged bills. Which by now is very ironic as they have the biggest fudged bill ever – the letter from Raju.

Few employers aren’t that innovative. Jet Airways has to face the wrath of the employees and the government when it decided to fire people. It revoked its decision and took the employees back.Â

Uncertain times require uncertain and innovative measures to cut costs. Here is the latest from the cost cutting innovations of India Inc :

Mastek has offered 425 employees two options. Leave the company or get trained in a new skill for a nominal pay. The 425 employees are in excess of bench strength. Mastek thinks 80% of the employees will stay around. This is the politically correct version of the so-called non-performance.

Hindustan Unilever is resorting to the old management paradigm of performance related pay. It has increased the variable pay component and linked it directly to the performance of the employee. This to me is less cruel and more like a performance-boosting move. It saves the cost to the company as the fixed costs are moved to the variable component.

Tata Group is more direct in its cost cutting. Its top executives will receive 10-15% less salary. This move includes all the companies including Tata Consultancy Services (TCS) and Tata Motors, which did not meet the market expectations.